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2026 Supreme(SC) 1001
SUPREME COURT OF INDIA
J. B. PARDIWALA, K. VINOD CHANDRAN, JJ.
Harinder Singh Sodhi – Appellant
Versus
State of Rajasthan and Ors. – Respondents
Civil Appeal No. 12041 of 2026 (Arising out of SLP (C) No. 36745 of 2025)
Decided On : 24-08-2026
Important Points
Subject
Property Law - Stamp Duty – Classification of Land
Act Referred
Headnote
(B) Appeal - Scope - The High Court cannot substitute its own test when the State Government’s circular provides clear criteria for valuation based on user. (Para 9)
Facts of the case:
The property was owned by a family carrying on business in a multi-storey building with ground and three floors. One brother gifted his share to another brother. The gift deed was stamped as residential land. The Sub-Registrar conducted an inspection and found a showroom named ‘Sodhi Carpets’ and commercial enterprises in the area. The Collector inspected and found the building used as a factory, registered under the Factories Act, 1948 and with the District Industries Centre. The Rajasthan Tax Board agreed with the Collector. The High Court reversed, holding that because both manufacturing and sale of goods were conducted, the property was commercial.
Findings of Court:
The Supreme Court reversed the High Court’s order and restored the concurrent findings of the statutory authorities. The Court held that the user test from the circular is determinative; sale of manufactured goods does not convert industrial use to commercial use. The valuation for industrial land is lower to promote industry, and the fact that the gift deed was stamped at a higher residential rate does not entitle a refund.
Issues: The main issue was whether the property, used for both manufacturing and retail sale, should be classified as industrial or commercial for stamp duty purposes under the Rajasthan Stamp Act, 1998, and whether the High Court applied the correct legal test.
Ratio Decidendi: The court ruled that under the Rajasthan Government’s Circular No.2/2004, the valuation of land for stamp duty is determined by its actual user at the time of execution of the document, not by its classification in the Master Plan or the presence of commercial activities incidental to manufacturing. Therefore, a property used for industrial purposes, even if it includes sale of manufactured goods, is to be valued as industrial land. Result : Appeal allowed. The order of the High Court is set aside and that of the statutory authorities is restored. No refund of excess stamp duty paid. Pending applications disposed of.
For the Petitioner(s): Mr. Anant Kasliwal, Sr. Adv. Mr. Vaibhav Kasliwal, Adv. Mr. Bhargava V. Desai, AOR Mr. Shivam Sharma, Adv. Mr. Utkarsh Vats, Adv. Ms. Prakriti Rastogi, Adv. Ms. Surbhi Tuli, Adv.
For the Respondent(s): Mr. Shiv Mangal Sharma, A.A.G. Mr. Shivansh B. Pandya, Adv. Mr. Saurabh Rajpal, AOR
| Table of Content |
|---|
| 1. the dispute revolves around the classification of a gifted property as industrial or commercial for stamp duty purposes. (Para 2 , 3 , 4 , 5 , 6) |
| 2. user of the property, not area classification, determines valuation for stamp duty; industrial use includes manufacturing and incidental sale. (Para 7 , 8 , 9) |
| 3. appeal allowed, order of statutory authorities restored; no refund of excess stamp duty voluntarily paid. (Para 10 , 11 , 12) |
ORDER :
Leave granted.
2. The neat question to be considered to the above case is as to whether the property which was subject of a gift deed should be considered to be an ‘industrial’ property or a ‘commercial’ property for the purposes of computing the duty under the Rajasthan Stamp Act, 1998. Admittedly, the deed was registered as a ‘residential’ land.
3. Valuation for the purpose of stamp duty for residential land is higher than that of industrial land, but lesser than that of a commercial land. The Sub-Registrar conducted an inspection of the property and found it to be a commercial land, especially, since the use to which the land was put, according to him, was a showroom in the name of Sodhi Carpets. The Sub-Registrar also relied on the fact that the area called Golimar Garden had a number of commercial enterprises.
4. The Collector being the authority under the Stamp Act, also carried out an inspection and found the building in the property being used as a factory, definitely an industry. The Rajasthan Tax Board after looking at both the inspection reports i.e., of the Sub-Registrar and the Collector, agreed with the Collector, especially after reckoning the circular issued by the Government of Rajasthan.
5. The State, however, challenged the orders of the statutory authorities before the High Court. The High Court reversed the concurrent findings of the statutory authorities on the ground that the test to determine the use for industrial purposes, would be as to : i) whether the property is situated in the industrial area; and ii) whether the work performed is exclusively of manufacturing and nothing further is being done. Finding that not only manufacturing but also sale of manufactured goods were being conducted, it was held to be a commercial building.
6. The property was owned by a family who were carrying on their business in a multi-storey building with ground and three floors. Separate ownership was assigned to siblings, of whom, one brother gifted his share to another brother. The gift deed was stamped in accordance with the valuation applicable to residential premises. The Sub-Registrar sought enhancement finding it to be commercial premises. The appellant’s contention before the Sub-Registrar and the statutory authorities was that in fact the property is used for industrial purposes, the premises having been registered as a factory under the Factories Act, 1948 and also registered as an industry under the District Industries Centre, Jaipur. It was also contended that the gift deed was stamped with duty more than that applicable to industrial lands, since the duty remitted was reckoning the land to be a residential one.
7. We have looked at the orders of the statutory authority and Circular No.2/2004 issued by the Government of Rajasthan, bringing in the method of valuation of different categories of land, for the purpose of determining stamp duty. The Collector had in fact conducted a physical inspection of the premises and found a manufacturing activity going on. The manufactured items definitely had to be sold and if the premises is used for such sale too, even retail sale, it cannot lead to a conclusion that the property is one used for commercial purposes, as distinguished from an industrial purpose. Obviously, the lesser valuation is made applicable to industrial use to promote such industrial activity; which valuation is lesser than that applicable for residential premises. The registration as a factory and as an industry also assumes significance, especially look
